The price of Shiba Inu has rallied over 325 per cent in the last week, making its way into the top 15 tokens ahead of Algoran, Bitcoin Cash and Stellar. Its fully diluted market cap now stands at $30.07 billion.
Memecoins are generally overcrowded by retail investors because of their cheap entry levels, and strong community engagement, said Hitesh Malviya, founder, itsblockchain.com.
“Retail investors follow Musk’s lead whenever he posts something about dogecoin or any other meme coin,” he added. Elon Musk, one of the World’s richest persons, has been an avid supporter of Dogecoin on social media.
Shiba Inu is not an exception. Every meme token which has ‘Inu’ in it has skyrocketed recently. Safemoon Inu has soared over 185 per cent just in the last 24 hours while CateCoin has jumped up to 510 per cent in the last week.
Other less known memecoins such as Husky, SafeMoon Inu, Hokkaidu Inu, Akita Inu, Kishu Inu and Shih Tzu have rallied between 200 and 500 per cent in the last one week.
Memecoins are extremely volatile coins within the universe of the already volatile cryptocurrencies. There is hardly any fundamental reason behind the rise of meme coins.
Backers of namecoins believe that memes are the currency of the internet, gaining popularity among the younger crowd. Memes are usually used to kind of convey a certain point or idea.
It is not the first instance when the fire fueled by Musk’s tweet has resulted in wild swings in any cryptocurrency. Prior to this, his social media commentary and hints have led to wild swings in Dogecoin and Bitcoin.
There is mostly the fear of missing out for the retail investors that cause further rally, said Edul Patel, CEO and Co-founder, Mudrex. “There is hardly any value in such meme coins. In the absence of any social media buzz, such coins find it difficult to survive,” he added.
The crypto market is still in the nascent stage. Hence, it reacts to the mercurial figures like Tesla boss, who appeared to be the darlings of the crypto world.
The only fundamental strength in these meme coins is the strong communities behind these projects, Malviya added. “Communities have played a key role in the cryptocurrency industry since its inception.”
Crypto veterans suggest investors to stay away from the euphoria-based token. They said that value creation happens in the long run and investors should follow a buy-in-dips approach.
Malviya cautioned investors to keep off such meme coins and avoid investing their hard-earned money into them. “Such coins have thin order books which can be easily manipulated by a single big buy or sell order by whales,” he said.
Market experts said that investors should analyze how much community is linked to it, before investing in such joke tokens.
“Shiba has a pretty strong community linked to it, even in India. It has kind of got listed on major venues, including Coinbase, which has fairly strict listing norms,” said Dahake.